How to Respond to a Denied Commercial Insurance Claim: Step-by-Step Guide

Insurers can deny claims for many reasons. Sometimes, there are legitimate reasons for claim denial. In other cases, the insurer may be unjustly trying to avoid paying out.

Keep reading to discover the specific steps to take after an insurer denies your commercial insurance claim.

Step 1) Review the Denial & Check Your Policy

There may be a straightforward reason for an insurer to deny your claim. Maybe the damage was caused by flooding and you don’t have flood damage, for example.
To start, check the insurance company’s denial statement, then review your policy:

• Check the denial statement for specific reasons why the insurer is denying coverage.
• Check your policy to verify the reason for the denial. Your policy should clearly outline coverages, exclusions, and other justifications for denying your claim.

After reviewing, you can determine whether or not the insurer had a valid reason to deny your claim.

Your policy may require you to notify the insurer within 30 days of the covered loss, for example. If that’s the case and you didn’t alert the insurer for 60 days, then you may be out of luck.

If the denial is more ambiguous, however, then you may be able to fight back, refute the insurer’s denial, and get the compensation you deserve.

Step 2) Understand Common Reasons for Commercial Claim Denial

One of the most common reasons why an insurer rejects a commercial insurance claim is for insufficient documentation. You may not have provided enough evidence to prove the claim was legitimate.

Check your denial statement for common denial reasons like:

• Insufficient documentation. You may not have provided sufficient photo or video evidence proving the loss occurred to your business.
• Failure to update your policy. The damage may have occurred to a new part of your business that was not covered under your original policy – like a $10,000 piece of equipment you recently purchased.
• Failure to notify your insurer on time. All policies require you to inform your insurer of the loss within a certain period of time. If you don’t notify your insurer within that length of time, your claim could be denied.
• Unpaid premiums. If your business did not pay its premiums on time, then your insurer could deny your claim. As a policyholder, you have an obligation to pay premiums on time.

Depending on the reason for the denial, it may be easy or hard to resolve your denial. You may simply need to provide additional evidence, for example.
If the denial was caused by unpaid premiums, however, then you may not have much recourse.

Step 3) Challenge the Insurer’s Denial

If you believe the insurer did not have a valid reason to deny your business’s commercial claim, then you can challenge the denial.

First, check your policy to verify the steps to take in order to challenge a claim. All policies have a dispute resolution clause, for example. The clause may require you to provide a written statement within 14 days of receiving the statement of denial.

Use the statement to explain your business’s side of the claim. Highlight why you believe the denial is unreasonable. Cite specific sections of your policy that apply to the claim.

Step 4) Document Everything & Keep Evidence

While dealing with a denied commercial insurance claim, it’s important to document everything and keep records.

The insurer may review your claim and demand additional evidence. If you’re unable to provide that evidence, then the insurer may deny your claim again.

Some of the things to document when dealing with a denied claim include:

• Any conversations with your insurance company, insurance company’s adjusters, managers, or other employees, including the date and time of the conversation and the topics discussed
• Photos and videos of the damaged property and destroyed items
• Estimates from contractors
• Receipts from any expenses your business incurred as a result of the loss (like temporary rent at a separate location)
• Any additional evidence supporting your business’s losses

The more documentation you can provide, the easier a claim dispute will be.

Step 5) Understand How Bad Faith Denials Work

Insurers deny claims for legitimate reasons. However, some insurers engage in bad faith denials, where they deny insurance claims without a good reason.

A bad faith denial occurs when the insurance company breaches its duty of good faith and fair dealing.

Some of the signs your insurance company is engaging in a bad faith insurance claim denial for your commercial claim include:

• Your insurer is dragging its feet and taking a long time to respond to your concerns.
• The insurer fails to investigate the claim properly.
• The insurer denies your claim without a clear or appropriate reason for the denial.
• The insurance company’s adjuster is engaging in other dishonest business practices.

If you notice one or more signs your insurer is practicing in bad faith, then it may be worth speaking with a public commercial insurance adjuster or attorney.

Step 6) Speak with a Commercial Public Insurance Adjuster or Attorney

If you’re dealing with an insurance claim dispute, or if your insurer is acting in bad faith, then it may be in your business’s best interests to speak with a commercial public insurance adjuster or attorney.

Public adjusters and insurance attorneys play similar roles: they represent policyholders against the insurance company, fighting on your behalf for a successful claim.

Public adjusters could perform roles like:

• Negotiate with the insurer to resolve the claim and take other appropriate action.
• Oversee your claim from start to finish
• Organize documentation
• Provide the information the insurer needs to maximize claim payout
• Work with your claim at every step to ensure an optimal insurance claim outcome

If your insurer is denying your business’s claim and you don’t see a path forward, then consider hiring a public adjuster.

ClaimsMate’s public adjusters specialize in resolving commercial insurance claim disputes.

Contact ClaimsMate today for a no-cost consultation with a commercial public insurance adjuster.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.